The operation will be run by AT&T Entertainment & Internet Services CEO John Stankey, who will report to company CEO Randall Stephenson. Stankey’s unit will be the second largest revenue generator at AT&T by year end after Business Solutions (both wireless and wireline) and ahead of Consumer Mobility, and International Mobility and Video.

Former DirecTV CEO Michael White plans to retire.

In addition to offering the satellite service, AT&T says that it is “developing unique video offerings” with Otter Media, its joint venture with Peter Chernin’s The Chernin Group.

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“We’ll now be able to meet consumers’ future entertainment preferences, whether they want traditional TV service with premier programming, their favorite content on a mobile device, or video streamed over the Internet to any screen,” Stephenson says. “We’re now a fundamentally different company with a diversified set of capabilities and businesses that set us apart from the competition.”

AT&T says it serves more than 26 million domestic TV customers, and 191 million in Latin America. It has more than 132 million wireless subscribers in the U.S. and Mexico. It also owns stakes in The Tennis Channel, MLB Network, NHL Network, and GSN (Game Show Network).

DirecTV investors will receive $28.50 in cash and 1.892 shares of AT&T — which closed today at $34.29 — for each share in the satellite company.